question archive The primary purpose of the basic economic order quantity model is a)to calculate the reorder point, so that replenishments take place at the proper time b)to minimize the sum of carrying cost and holding cost c)to maximize the customer service level d)to minimize the sum of setup cost and holding cost e)to calculate the optimum safety stock
The primary purpose of the basic economic order quantity model is a)to calculate the reorder point, so that replenishments take place at the proper time b)to minimize the sum of carrying cost and holding cost c)to maximize the customer service level d)to minimize the sum of setup cost and holding cost e)to calculate the optimum safety stock
Subject:EconomicsPrice:2.87 Bought7
The primary purpose of the basic economic order quantity model is
a)to calculate the reorder point, so that replenishments take place at the proper time
b)to minimize the sum of carrying cost and holding cost
c)to maximize the customer service level
d)to minimize the sum of setup cost and holding cost
e)to calculate the optimum safety stock
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Answer:
d)to minimize the sum of setup cost and holding cost
Step-by-step explanation
- In inventory management, EOQ is considered an important tool in managing the number of units that a company should hold to ensure there is no shortage and also, all customer needs are met at the right time without delay.
- By doing this, the setup costs and holding costs all of which are categorized as inventory costs, are reduced to the minimum.
- It achieves this by determining the optimal inventory quantity the company should keep while ensuring the customer needs and demands are met.
